Here’s why Telstra’s startup incubator Muru-D is off to China instead of the US next month

Muru-D’s second round of startups. Image: Supplied.

Telstra’s startup incubator Muru-D is taking its latest round of recruits to China next month.

Last year, the first round of Muru-D startups jetted off to San Francisco and LA, but with increasing competition in the US, the incubator is trying a different strategy.

“Part of the reason to go there is that there’s so much attention on the US and there’s so many people going there that it’s much, much harder to get cut through,” Muru-D’s entrepreneur in residence Mick Liubinskas said. “China is taking over the USA in terms of the largest global economy.”

Tripalocal’s website translates in one click to Chinese.

“Maybe it’s a harder angle right now but it’s a bit of an investment for the ecosystem in the longer term and it’s certainly an investment for these entrepreneurs.”

After vetting the idea with some of the incubator’s mentors, he decided to go for it.

“We looked at this year and realised that a number of our companies had Asia value propositions,” Liubinskas said.

Muru-D’s latest intake of startups include WattBlock Energy which retrofits buildings to cut energy consumption and shows signs of correlating nicely with the recent tightening around China’s air pollution regulations. This is something the Chinese government has acknowledged – the startup is actually an official guest of the state.

Other startups include education tech platform Maak Pad, online soccer coaching startup Soccer Brain, long haul logistics company Freight Exchange, local travel tips site TripaLocal as well as 3D-printed surfboard manufacturer Disrupt and sports sponsorship deal flow mediator Fan Fuel.

“Even if not one of the businesses had a China angle, there’s immense value in taking people out of the local market and putting them to a very big market,” Liubinskas said.

Logistics marketplace startup FreightExchange translated into Mandarin.

“Australia really under-delivers. I think we punch above our weight but we’re still under-delivering because we are geographically large but market small, as opposed to New Zealand who are geographically small and market small so they are actually born global.

“Singapore’s the same. No one’s trying to build a business based on the Singaporean market.

“One thing we need to do is get people out of their comfort zone and one of our criteria is that they’re building a global business and we’re online, so you might think you can do it all from here but you do still need to get on a plane and see a market – partly to inspire you and partly to scare you to death.”

The 10-day trip takes the entrepreneurs to Shanghai, Shenzhen, and Beijing. With three days in each city the entrepreneurs will meet with local startups, investors, media and government officials. It’s up to the startups to fund their own trip but Muru-D is organising introductions and the itinerary.

Getting ready for the trip next month, each of the startups have had banners and business cards printed in Chinese and translated their websites.

Energy startup WattBlock getting ready for its China tour.

“It’s about what it would be like building a business in China, what are the pros and cons and to start building connections,” Liubinskas said.

“The next two days are for followups…There’s no expectations that there will be deals done or anything like that.”

Australia’s trade relationship with China, which has been strengthened during the mining boom, means there is a significant opportunity there for other industries.

“We know there’s a lot of interest from Chinese investors,” he said.

While China isn’t going to be the new San Francisco for the tech sector in the short term, it’s massive population, which is increasingly urbanised, coupled with the drop-off in mining investment and Australia’s transitioning economy, means it’s as good a time as any to start expanding the investment relationship towards Australian technology and innovation.

“San Francisco has done 70 years of reinvestment, reinvestment and reinvestment and it’s pretty freakish,” Liubinskas said.

“But if you think about longer term opportunities, if you think about good relationships, if you think about gaps and every business is different – it’s one of the beauties and challenges of Muru-D – but no doubt that there are huge opportunities there in [China] and worth jumping on a plane for,” he said

Each of the 11 startups participating in the Muru-D program received $40,000 in seed capital in return for signing over 6% equity in each business. They also received six months’ of office space, mentoring and business support to build out the ideas.